Romney Hits Obama on Trade Deals Relying on Narrow Distinction

Lee Myung-bak (L), president of South Korea, shakes hands with U.S. President Barack Obama after speaking at the General Motors Co. (GM) plant in Orion Township, Michigan, 2011. The U.S.-Korea free trade agreement will help create jobs, Obama stated, after touring the plant. Photographer: Jeff Kowalsky/Bloomberg

Oct. 9 (Bloomberg) -- Republican Mitt Romney faulted
President Barack Obama on trade by relying on a narrow
definition of the president’s record.

Obama “has not signed one new free-trade agreement in the
past four years,” Romney said in a speech yesterday at the
Virginia Military Institute in Lexington, Virginia. “I will
reverse that failure.”

Almost one year ago, on Oct. 21, 2011, Obama signed into
law free-trade agreements with South Korea, Colombia and Panama.
While the accords weren’t new -- they had been initiated and
agreed to with those three nations under President George W.
Bush -- Obama revised the deals to break a stalemate that had
stalled ratification for four years.

Romney’s remarks are “campaign rhetoric, so you go right
to the margin without being technically inaccurate,” said Gary
Hufbauer, a senior fellow at the Peterson Institute for
International Economics in Washington.

With 28 days left until the election, Romney is seeking to
capitalize on his gains following his first debate with Obama
last week. A Pew Research Center poll conducted in the days
following the debate showed Romney leading Obama by 4 percentage
points among likely voters. The trade comments were part of a
foreign-policy address in which Romney accused Obama of being
passive in the face of international challenges.

‘Absurd Premise’

Jen Psaki, a spokeswoman for the Obama campaign, said
Romney’s remarks are based on “an absurd premise.”

“The president renegotiated the trade agreements -- made
them better for American workers, made them better for the
American auto industry and the American meat industry -- and
that’s why we not only got them through Congress, but the
president actually signed them into law,” she told reporters
traveling with Obama in California.

Putting a free-trade agreement into effect is a two-part
process. First, the deal is signed with the other country, then
the president must win congressional passage and sign into law
the enabling legislation.

During the first two years of his term, Obama worked on
overcoming objections to the deals from U.S. companies,
including the Ford Motor Co., and labor unions. The final pacts
included new terms for auto tariffs from South Korea, a tax-information exchange with Panama and labor-rights assurances
from Colombia.

Congressional Passage

While the bulk of the three free-trade agreements were
negotiated under Obama’s predecessor, “there were some
remaining small issues, but important issues, to get it through
Congress,” Michael Moore, a professor of economics at George
Washington University who also served in the Bush administration
as an economist specializing in international trade. Getting
congressional approval is “not a small thing.”

Final approval of the trade deals marked an occasion where
Obama worked with Republicans in Congress to gain passage even
as most House Democrats voted against them and the AFL-CIO labor
federation continued to oppose ratification.

“What Obama did, slowly and not with a lot of enthusiasm,
but he did finally do it, was send them to Congress for
ratification,” Hufbauer said.

The South Korea deal alone is the biggest for the U.S.
since the North American Free Trade Agreement in 1994. The U.S.
International Trade Commission projects it will boost U.S.
exports as much as $10.9 billion in the first year that it’s in
full effect.

Trade Accord

The centerpiece of Obama’s trade initiatives is negotiating
agreement with eight Pacific nations called the Trans-Pacific
Partnership. The current talks are with Australia, Chile, Peru
and Singapore, all of which already have separate free-trade
agreements with the U.S., as well as with Malaysia, New Zealand,
Vietnam and Brunei.

Two-way trade between the U.S. and those eight nations
totaled $171 billion in 2010, compared with $457 billion with
China. Japan, which does $181 billion in trade with the U.S.,
also has expressed interest in joining the group.

Work on trade deals with major economies or multiple
nations can span more than one administration. Negotiations for
the North American Free Trade Agreement with Canada and Mexico
began in 1986, under then-President Ronald Reagan, continued
under President George H.W. Bush and weren’t finished until Bill
Clinton took office. It was signed into law by Clinton on Dec.
8, 1993.

The U.S. probably could wrap up free-trade deals with
smaller economies within a single presidential term, though
getting those “notches in your belt” isn’t necessarily the
best course, Moore said. Obama’s made a choice to pursue bigger
agreements, primarily the Trans-Pacific Partnership. That
initiative was begun under Bush and Obama has “greatly expanded
the negotiations.”

“The T-PP would have a much bigger positive effect on the
U.S. economy than having three or four agreements with smaller
economies,” Moore said.